Margin vs markup

Margin and markup both describe profit, but they use different denominators. If an item costs 80 and sells for 100, profit is 20: margin is 20 ÷ 100 = 20%, while markup is 20 ÷ 80 = 25%.

Why the distinction matters

A target expressed as markup cannot be substituted directly for a margin target. Confirm the metric behind any pricing rule, then use the profit margin calculator.

Practical check

Margin starts with selling price; markup starts with cost. Keeping those bases visible prevents a correct formula from answering the wrong business question.